Beijing (AFP) - While US politicians grapple with how to reopen their shuttered government and avoid a potentially disastrous default on their debt, the world should consider 'de-Americanising', a commentary on China's official news agency said Sunday.

"As US politicians of both political parties (fail to find a) viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanised world," the commentary on state news agency Xinhua said.

In a lengthy polemic against American hegemony since World War two, it added: "Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.

"A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing."

Negotiations over how to end the budgetary impasse have shifted to the US Senate after House Representatives failed to strike a deal with President Obama on extending borrowing authority ahead of an October 17 deadline.

Beijing has in recent days issued warnings as well as appeals for a deal, all the while emphasising the inseparable economic ties that bind the world's two biggest economies.

"The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonised," said the commentary.
China is the biggest foreign holder of US Treasury bonds, worth a total of $1.28 trillion according to US government data.

"Instead of honouring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas," but equally stoked "regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies" the commentary said, referring to Iraq.

It added that emerging economies should have a greater say in major international financial institutions the World Bank and International Monetary Fund and proposed a "new international reserve currency that is to be created to replace the dominant US dollar".

China has only slightly more weight than Italy at the IMF, which has been headed by a European since its creation in 1944.

A governance reform has been in the works for three years but its implementation has been blocked by the effective veto of the United States.

What kind of an insurrection is going to restore global confidence in America? Even Britain wouldn't support an attack on Syria this time around and left leaning South American countries are exerting their independence of US dominance. Both China and Russia are calling for a different form of global default currency while China itself is growing its influence in geographic areas of American interest. This, combined with the fact that the era of peak oil has already been reached resulting in a steady decrease of America's ability to empower itself, makes America's decline inevitable. If the next president of the US does everything right, it still won't prevent the decline that will be further facilitated by international self-interest in detaching from a sinking ship.

An internal insurrection wouldn't amount to anything more than a quickly scratched itch. The American population is by no means of a mind for total insurrection. Even the militia patronizing, big talking, gun toting, Obama is the antichrist, ultra conservatives aren't actually of a mind for it. No matter how bad things are, life is still too good for the average American to be politically concerned enough to engage in independent action for changing the government. The only way an internal insurrection would even be feasible is if at least half of the Joint Chiefs of Staff were behind it. Otherwise, such an event would simply be an unorganized, unsupplied, out flanked, idea, that would be over before it ever even begun. Occupy Wall street is a perfect example of what support Americans would be willing to contribute to an insurrection. If America isn't willing to support a non-violent protest for change, it certainly isn't willing to support a violent one. In fact, any successful duration of a nationwide insurrection would only provide international cause for abandoning the dollar. Only a quickly executed bloodless coup would be able to avert that consequence.

Most of the country is furious at the Tea Party types in Congress who voted to shut down the government in a last ditch effort to stop the Affordable Care Act. They are terrified that their worst nightmare is about to come true: people across the country will be able to get affordable health care.

Polls show that this is not a very winning position. As a result, the Republicans are now desperately trying to convince the public that they really didn’t mean all those things they said about the Obamacare just before the shutdown. Actually this shutdown is over government spending.

This one is absurd even by Washington standards, but shutting down the government and threatening default on the debt over spending should not be much more popular than shutting it down to keep people from getting health care. After all, the vast majority of spending goes to programs that enjoy overwhelming support from the American people: Social Security, Medicare, Medicaid, unemployment insurance, education, infrastructure, and medical research.

The only major area of spending that does not enjoy overwhelming public support is the military. Of course the Republicans are not shutting down the government to force cuts in the Defense Department.

The reason that many people might be sympathetic to shutting down the government over spending is they are badly confused about where their tax dollars are going. Polls consistently show that people grossly overestimate the amount of money going to many less popular categories of spending.

A CNN poll from 2011 found that the typical person thought foreign aid accounted for 10 percent of the budget. The actual number is less than 1.0 percent. The poll found that a typical person thought funding for the Corporation for Public Broadcasting (CPB) took up 5.0 percent of the budget. The correct number is 0.012 percent. It is not surprising that if people think that these and other less popular areas of the budget account for much of the government’s spending, they might be willing to see extreme measures to cut spending.
This is where the New York Times comes into the picture. It is the media’s job to inform the public about the budget. They are clearly failing badly. A major reason is very simple. When they write about the budget they almost never put the numbers in context.

As a result, readers might hear that we’re spending $15 billion on foreign aid or $400 million on the CPB and think that this is a lot of money. Of course it is a lot of money for anyone other than Bill Gates. Almost none of us will ever see this sort of money in our lifetime. But it is not a lot of money for the federal government.
This point would be immediately apparent in every news report on the budget if the standard practice was to report budget items as a share of the budget instead of in dollar terms. Telling readers that spending on CPB takes up 0.012 percent of the budget immediately tells them how important this spending is to the government. Telling readers that we’re spending $400 million on CPB tells the overwhelming majority of readers almost nothing.

There is no excuse for budget reporting that does not actually inform its audience. This is not a question where additional resources are needed. There is no reporter at any major news outlet who can’t turn a dollar amount into a percentage of the budget in seconds. (They can even use the Center for Economic and Policy Research’s magnificent new Responsible Budget Reporting Calculator.)
This is something that can actually change. The current practice of budget reporting is 100 percent indefensible. No reporter will say with a straight face that any substantial percentage of their readers has any clue what it means when they write about a $40 billion cut to food stamps over the next decade.

Fortunately the New York Times (NYT) has a public editor, Margaret Sullivan, who takes journalistic standards seriously. There is good reason to believe that if enough people were to raise this issue with her that she would look into the issue and press the matter with the paper’s editors.

If the New York Times were to change its practice for budget reporting most of the rest of the media would almost certainly follow. The NYT is recognized as the preeminent newspaper in the country. Their standards are taken seriously by everyone.

This is an issue where progressives can win. We are clearly right – there is no argument on the other side. The liberal advocacy groups that support various forms of social spending would be pushing this issue themselves, but they have a strict philosophical principle: “we have been losing for 30 years, why change now?”

This can be done. We can get the NYT to stop supporting the Tea Party, if we ask them.

The economic ignorance of the Teapublican faction of the Republican party in the US House and Senate is perhaps exceeded only by the similar ignorance of its economic advisers.

Appearing in the public press in recent days is the latest ‘brilliant’ Teapublican view that a default by the US government on paying interest on its debt would not have a negative impact on the US or global economy.

Both the US and global economies are already slowing noticeably, with the Federal Reserve in the US continuing to downgrade and lower its estimates of future US growth, and the IMF doing the same for growth rates in China and the rest of the world. The Teapublicans claim a US debt default would not impact these already negative trends.

While it is true that the US government will not completely run out of money with which to pay its debts on October 17, 2013, as Treasury Secretary, Jack Lew, has publicly stated, it is equally true that it will definitely do so sometime between October 24 and early November. Thereafter, some funds will continue to come into the government, but not nearly enough to pay all its bills. That will force the Obama administration to choose between what it will pay: either bondholders who own US debt or grandma and grandpa on social security. Teapublicans no doubt want to force Obama to make that ‘Hobsons’ Choice’ (i.e. damned if you do and damned if you don’t). Teapublicans will argue he should pay the bondholders first, and forego paying social security. It’s their way to start cutting social security before they even negotiate an official reduction in it with Obama.

To quote one Teapartyer’s statement today, Republican Representative, Joe Barton, of Texas: “We have more than enough cash flow to pay interest on the public debt, so there is no way we’re gong to default on the public debt unless the president of the United States intentionally does so”.

Such statements by lesser known Teapublicans were followed up today in the business press with an article by Teapublican notable, Paul Ryan. Ryan made it clear that the focus of the debt ceiling discussion was to provoke further concessions by Obama on Social Security-Medicare cuts. US House radicals thus are attempting to put Obama in a negotiating box: either he agree to cut Obamacare or to cut Social Security-Medicare.

What the Teapublican faction in all their economic ignorance don’t understand, however, is that the psychological effects of a default—or even a near default—on the US and global economy will prove significant. One does not have to wait for a complete default for that to happen.

What then are some of the possible impacts?

First is the prospect of rising interest rates. Interest rates have already begun to rise, starting on a base that has already risen since the US Federal Reserve’s bungled attempt to signal over the past summer its intent to begin reducing (tapering) its Quantitative Easing (QE) $85 billion a month liquidity injections. That Fed ‘faux pas’ has already driven up long term rates by more than 1%, thereby causing an abrupt halt to a very timid US housing recovery earlier this year. In the past month banks and mortgage servicing companies have already announced thousands of layoffs in their mortgage departments, signaling the virtual end of that housing recovery. Further interest rate hikes, short and long term, on top of the Fed’s recent bungling—which will now certainly occur as the default approaches—will all but ensure the end of any housing recovery in the US.

Short term rate increases will most likely accelerate further throughout the month of October. That includes, in particular, Treasury bill rates which will in turn impact other rates. ‘Other rates’ include the critically important ‘Repo Market’ rates. Destabilizing the repo market is a dangerous game. It is likely the locus for the next financial crash, the analog to the subprime market that was the center of the last financial crash. Teapublicans are thus playing a dangerous game, one that may well in a worst case scenario precipitate another financial instability event on the scale of 2008.
Rising interest rates also mean the end of the latest stock price and junk bond booms. In itself, that doesn’t affect average folks much. But the psychological impact of a rapid decline in asset prices can, and does, spill over to consumer and business spending. That leads to layoffs, in a US job market that is, at best, producing only part time, temp, and low paid jobs as it is.

Rising rates and an even weaker job market in November-December will translate into slowing consumption, which is already showing signs of weakness in August-September. Retail sales in general will weaken still further as a consequence of the debt ceiling default, as will an already ‘long in the tooth’ auto sales cycle.

The negative impact of debt default on consumption is already becoming evident in recent weeks. A Gallup Poll in recent days showed consumer confidence dropping precipitously. While some argue confidence surveys are typically volatile and unreliable as indicators of consumer spending, that is not as true for abrupt and significant movements in confidence indicators. That may now be happening, as the public begins to focus on the dual crises events.
The recent Gallup poll in question fell to -35 from a prior -15. This compares to -56 during the August 2011 worst period of that prior debt ceiling debacle. During the worst period of October 2008 the index was -66. Already falling significantly early in the current crisis, one can estimate where the -35 current poll will be by October 17-24 should the crisis not be resolved by then. We will almost certainly be in the August 2011 territory, when the third quarter US GDP nearly went negative (and did so if the GDP deflator was substituted with the CPI index for that quarter).

Globally, the approaching debt ceiling crisis has already provoked widespread public responses by foreign governments, warning a potential default by the US would have dire consequences for US debt holdings and future purchases. China, Japan, and the IMF have all raised warnings in recent days. If default occurs, then US bond rates will rise even further and faster than at present, raising a real question whether they will continue to purchase US Treasury debt when the price of their holdings are declining significantly in the wake of a default.

There are also important implications of a default (or even near default) for the Eurozone’s own current economic recovery and its still very fragile banking system.

Yet another negative impact globally will be a decline in Euro exports. A default situation would result in the US currency losing value, causing a further rise in the already fast appreciating Euro currency. That trend would challenge German and Euro export growth and therefore that region’s tepid 0.3% last quarter’s recovery.
Another problem potentially to grow worse is the Euro banking system. The Eurozone’s version of QE-the LTRO liquidity injection policy of the past year amounting to more than $1.5 trillion-will soon need another LTRO II injection by the European Central Bank in a matter of months. In addition, more than $1 trillion of the LTRO I will need to be refinanced soon. Nearly all the major banks in Italy, for example, have yet to repay anything of their share of the LTRO $1.5 trillion and will need further liquidity in coming months. Rising interest rates from a debt default in the US will spill over to Europe, thus raising the costs of LTRO II, as well as the financing of much of LTRO I. That will cause further fragility in the Euro banking system and economic recovery there, especially for the highly fragile Italian banks.

For Japan, its recent export gains would also slow, at a time when it has decided to raise taxes while suspending structural economic reforms.

Currency volatility in emerging markets would also intensify from a debt default in the US, likely causing a retreat once again in real growth in those markets, just a few months after their recent ‘stop-go’ provoked by US Fed QE policy uncertainties this past summer.
Throughout the past 18 months, this writer has forewarned that a fragile US economic and global recovery-not nearly as robust as some maintain-is susceptible to a ‘double dip’ recession in 2013-14 should one or more of the following negative ‘tail events’ occur: first, a renewed banking crisis in the Eurozone or elsewhere; second, significant further deficit cutting in the US; and thirdly a continued drift upward in US long term interest rates as a consequence of QE tapering or other events. While it appears the Euro banking crisis has temporarily stabilized—except for Italian banks perhaps—the deficit cutting and interest rate trajectory in the US are very real and serious trends that may yet precipitate a descent into a double dip condition in the US economy.

And if the Teapublican faction in the US House of Representatives managers to prevent a resolution of the debt ceiling issue into the latter part of October, then the economic consequences for both the US and global economies will be severe, and may even prove sufficient to precipitate a double dip recession in the US.

The final days of empire give ample employment and power to the feckless, the insane and the idiotic. These politicians and court propagandists, hired to be the public faces on the sinking ship, mask the real work of the crew, which is systematically robbing the passengers as the vessel goes down. The mandarins of power stand in the wheelhouse barking ridiculous orders and seeing how fast they can gun the engines. They fight like children over the ship’s wheel as the vessel heads full speed into a giant ice field. They wander the decks giving pompous speeches. They shout that the SS America is the greatest ship ever built. They insist that it has the most advanced technology and embodies the highest virtues. And then, with abrupt and unexpected fury, down we will go into the frigid waters.

The last days of empire are carnivals of folly. We are in the midst of our own, plunging forward as our leaders court willful economic and environmental self-destruction. Sumer and Rome went down like this. So did the Ottoman and Austro-Hungarian empires. Men and women of stunning mediocrity and depravity led the monarchies of Europe and Russia on the eve of World War I. And America has, in its own decline, offered up its share of weaklings, dolts and morons to steer it to destruction. A nation that was still rooted in reality would never glorify charlatans such as Sen. Ted Cruz, House Speaker John Boehner and former Speaker Newt Gingrich as they pollute the airwaves. If we had any idea what was really happening to us we would have turned in fury against Barack Obama, whose signature legacy will be utter capitulation to the demands of Wall Street, the fossil fuel industry, the military-industrial complex and the security and surveillance state. We would have rallied behind those few, such as Ralph Nader, who denounced a monetary system based on gambling and the endless printing of money and condemned the willful wrecking of the ecosystem. We would have mutinied. We would have turned the ship back.

The populations of dying empires are passive because they are lotus-eaters. There is a narcotic-like reverie among those barreling toward oblivion. They retreat into the sexual, the tawdry and the inane, retreats that are momentarily pleasurable but ensure self-destruction. They naively trust it will all work out. As a species, Margaret Atwood observes in her dystopian novel “Oryx and Crake,” “we’re doomed by hope.” And absurd promises of hope and glory are endlessly served up by the entertainment industry, the political and economic elite, the class of courtiers who pose as journalists, self-help gurus like Oprah and religious belief systems that assure followers that God will always protect them. It is collective self-delusion, a retreat into magical thinking.

“The American citizen thus lives in a world where fantasy is more real than reality, where the image has more dignity than the original,” Daniel J. Boorstin wrote in his book “The Image: A Guide to Pseudo-Events in America.” “We hardly dare face our bewilderment, because our ambiguous experience is so pleasantly iridescent, and the solace of belief in contrived reality is so thoroughly real. We have become eager accessories in the great hoaxes of the age. These are the hoaxes we play on ourselves.”

Culture and literacy, in the final stage of decline, are replaced with noisy diversions and empty clichés. The Roman statesman Cicero inveighed against their ancient equivalent—the arena. Cicero, for his honesty, was hunted down and murdered and his hands and head were cut off. His severed head and his right hand, which had written the Philippics, were nailed onto the speaker’s platform in the Forum. The roaring crowds, while the Roman elite spat on the head, were gleefully told he would never speak or write again. In the modern age this toxic, mindless cacophony, our own version of spectacle and gladiator fights, of bread and circus, is pumped into the airwaves in 24-hour cycles. Political life has fused into celebrity worship. Education is primarily vocational. Intellectuals are cast out and despised. Artists cannot make a living. Few people read books. Thought has been banished, especially at universities and colleges, where timid pedants and careerists churn out academic drivel. “Although tyranny, because it needs no consent, may successfully rule over foreign peoples,” Hannah Arendt wrote in “The Origins of Totalitarianism,” “it can stay in power only if it destroys first of all the national institutions of its own people.” And ours have been destroyed.

Sensual pleasure and eternal youth are our overriding obsessions. The Roman emperor Tiberius, at the end, fled to the island of Capri and turned his seaside palace into a house of unbridled lust and violence. “Bevies of girls and young men, whom he had collected from all over the Empire as adepts in unnatural practices, and known as spintriae, would copulate before him in groups of three, to excite his waning passions,” Suetonius wrote in “The Twelve Caesars.” Tiberius trained small boys, whom he called his minnows, to frolic with him in the water and perform oral sex. And after watching prolonged torture, he would have captives thrown into the sea from a cliff near his palace. Tiberius would be followed by Caligula and Nero.
“At times when the page is turning,” Louis-Ferdinand Céline wrote in “Castle to Castle,” “when History brings all the nuts together, opens its Epic Dance Halls! hats and heads in the whirlwind! Panties overboard!”

The anthropologist Joseph Tainter in his book “The Collapse of Complex Societies” looked at the collapse of civilizations from the Roman to the Mayan. He concluded that they disintegrated because they finally could not sustain the bureaucratic complexities they had created. Layers of bureaucracy demand more and more exploitation, not only of the environment but the laboring classes. They become calcified by systems that are unable to respond to the changing reality around them. They, like our elite universities and business schools, churn out systems managers, people who are taught not to think but to blindly service the system. These systems managers know only how to perpetuate themselves and the system they serve, although serving that system means disemboweling the nation and the planet. Our elites and bureaucrats exhaust the earth to hold up a system that worked in the past, failing to see that it no longer works. Elites, rather than contemplate reform, which would jeopardize their privilege and power, retreat in the twilight of empire into walled compounds like the Forbidden City or Versailles. They invent their own reality. Those on Wall Street and in corporate boardrooms have replicated this behavior. They insist that continued reliance on fossil fuel and speculations will sustain the empire. State resources, as Tainter notes, are at the end increasingly squandered on extravagant and senseless projects and imperial adventures. And then it all collapses.

Our collapse will take the whole planet with it.

It is more pleasant, I admit, to stand mesmerized in front of our electronic hallucinations. It is easier to check out intellectually. It is more gratifying to imbibe the hedonism and the sickness of the worship of the self and money. It is more comforting to chatter about celebrity gossip and ignore or dismiss what is reality.

Thomas Mann in “The Magic Mountain” and Joseph Roth in “Hotel Savoy” brilliantly chronicled this peculiar state of mind. In Roth’s hotel the first three floors house in luxury the bloated rich, the amoral politicians, the bankers and the business owners. The upper floors are crammed with people who struggle to pay their bills and who are steadily divested of their possessions until they are destitute and cast out. There is no political ideology among decayed ruling elites, despite choreographed debates and elaborate political theater. It is, as it always is at the end, one vast kleptocracy.

Just before World War II, a friend asked Roth, a Jewish intellectual who had fled Nazi Germany for Paris, “Why are you drinking so much?” Roth answered: “Do you think you are going to escape? You too are going to be wiped out.”